Benchmarks continue weak trade in late morning session

Indian equity benchmarks continued their weak trade in late morning session after two days of gains as investors indulged in cutting down bets on disappointing macroeconomic data and mixed trend in Asian markets. Oil soared following a landmark deal by Russia and other non-OPEC producers to join the cartel in capping output, in a bid to end a stubborn global glut that has hammered prices. Traders also remained on sidelines ahead of domestic trade deficit data, November CPI inflation and WPI inflation to be announced later in the week, while globally Fed rate decision is awaited. The sentiments were under pressure with Industrial production shrinking an annual 1.9% in October, worsening from a 0.7% rise in the previous month and 9.8 percent growth in the year-ago month. Industrial production has contracted in four out of seven months so far this fiscal. In the April-October period, production declined 0.3 percent compared with 4.8 percent growth last year. Some pressure also crept in with the Centre and States failing to approve the GST laws on Sunday and agreed to meet on December 22 and 23 to hammer out a consensus, dashing hopes that the crucial bills would be introduced in the ongoing winter session of Parliament and making it tough to meet the April 1 rollout date across the country. The Centre and States have been locked in a logjam over the issue of administrative control after post-implementation of GST.

Investors took cautious approach of private survey which enlightened that post demonetization, earnings and spending took a hit across India. According to a survey, which covered 15,000 citizens from over 220 districts of the country, 20 percent have explicitly stated that their earnings have been impacted, while 48 percent said there is decline in spending after demonetization. Bihar, Jharkhand and Orissa are witnessing decline in earnings the most, followed by states like Gujarat, Maharashtra, Madhya Pradesh, Uttar Pradesh, Delhi, West Bengal and Kerala. Traders were seen piling position in Metal and PSU stocks, while selling was witnessed in Auto, TECK and IT sector stocks. In scrip specific development, select IT stocks were battered down on fears that the US may have stricter norms for H1B visa. The H-1B is a non-immigrant visa in the United States which allows US employers to temporarily employ foreign workers in specialty occupations. According to reports, Trump may reduce the cap on H-1B visas or raise the fees or auction them.

On the global front, Asian shares were trading mostly in red, ahead of a Federal Reserve meeting that is widely expected to raise US interest rates and as oil prices soared after producers agreed to reduce output. Japan’s Nikkei rose amid weakness in the Japanese Yen. Japan’s Core Machinery Orders rose to 4.1% in November, from -3.3% in the preceding month. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,250 and 26,700 levels respectively. The market breadth on BSE was negative in the ratio of 930:1091, while 113 scrips remained unchanged.

The BSE Sensex is currently trading at 26606.87, down by 140.31 points or 0.52% after trading in a range of 26578.63 and 26725.31. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.56%, while Small cap index was lower by 0.20%.

The two gaining sectoral indices on the BSE were Metal up by 0.30% and PSU up by 0.24%, while Auto down by 1.17%, TECK down by 0.89%, IT down by 0.88%, FMCG down by 0.77% and Bankex down by 0.68% were the losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.66%, Reliance Industries up by 1.10%, Sun Pharma up by 0.76%, SBI up by 0.70% and NTPC up by 0.49%.

On the flip side, Asian Paints down by 2.39%, Bajaj Auto down by 1.78%, Maruti Suzuki down by 1.54%, Tata Motors down by 1.52% and Adani Ports & Special Economic Zone down by 1.49% were the top losers.

Meanwhile, after the country’s industrial production showed sharp contraction dragged down by negative growth of manufacturing in the month of October, the industry body, Federation of Indian Chambers of Commerce and Industry (FICCI) in its latest survey has stated that India’s manufacturing sector may show growth improvement in the October-December quarter with a slightly better outlook for production, driven by better export prospects.

The proportion of respondents expecting higher exports in the period of July-September of 2016-17 went up to 46 per cent as against 41 per cent in April-June. According to the FICCI survey, outlook on domestic demand remains uncertain as of now. “The slight improvement in the outlook for manufacturing production in the third quarter of the current financial year was attributable primarily to better outlook for exports compared to previous quarters,” the survey pointed out.

Besides, over 43 per cent respondents reported higher capacity utilisation in the last quarter. “Despite better capacity utilisation, the future investment outlook is not very optimistic. As for the third quarter of 2016-17, 77 per cent respondents reported that they don’t have any plans for capacity additions for the next six months, as against 73 per cent in the previous quarter.

FICCI’s survey gauged expectations of manufacturers for the third quarter and mapped 12 major sectors, including auto, capital goods, cement and ceramics, chemicals and electronics and electrical, collecting responses from 332 manufacturing units from large and SME segments, with a combined annual turnover of over Rs. 4 lakh crore.

The CNX Nifty is currently trading at 8210.45, down by 51.30 points or 0.62% after trading in a range of 8195.55 and 8230.65. There were 12 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were ONGC up by 1.66%, Reliance Industries up by 1.01%, Sun Pharma up by 0.82%, NTPC up by 0.58% and SBI up by 0.47%.

On the flip side, Asian Paints down by 2.29%, Idea Cellular down by 2.02%, Bajaj Auto down by 1.89%, Ambuja Cement down by 1.87% and Grasim Industries down by 1.80% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 243 points or 1.07% to 22,517.98, Shanghai Composite decreased 60.93 points or 1.88% to 3,171.96 and Taiwan Weighted decreased 43.86 points or 0.47% to 9,348.82.

On the other hand, KOSPI Index increased 2.46 points or 0.12% to 2,027.15 and Nikkei 225 increased 180.4 points or 0.95% to 19,176.77.

Indonesia Stock Exchange and Malaysia Stock Exchange were closed for the day on account of ‘Celebration of the Prophet birthday’ holiday.